Singapore lists 2 actively traded Healthcare related S-Reits – ParkwayLife Reit and First Reit. Healthcare Reits invest in income-producing real estate primarily used for healthcare related purposes including but not limited to hospitals, medical offices, outpatient facilities and nursing facilities. As such, these Reits may be regarded as an option for investors to gain exposure to the growing and resilient healthcare sector.

ParkwayLife Reit is one of the largest listed healthcare Reits in Asia with a portfolio of 56 properties at S$2.29 billion in size. It has 64.6 per cent of its portfolio in hospitals and medical centres, and 35.4 per cent in nursing homes, across Singapore (64.3 per cent), Japan (35.4 per cent), and Malaysia (0.3 per cent).

ParkwayLife Reit reported 2.3 per cent year-on-year higher gross revenue for Q1 2022, arising from the3 properties it acquired last year and higher rent received from Singapore hospitals. The Reit noted that its distribution per unit (DPU) has grown steadily at a rate of 122.8 per cent since its listing.

In its Singapore portfolio (hospitals include Mouth Elizabeth Hospital, Parkway East Hospital, and Gleneagles Hospital), its master lessee Parkway Hospitals Singapore, is a wholly owned subsidiary of IHH Health which is one of the world’s largest healthcare networks with 80 hospitals in 10 countries. Its latest renewal term of 20.4 years runs from Aug 23, 2022 to Dec 31, 2042, with an option to renew for a further 10 years. It has a triple net lease arrangement which means that the Reit does not bear property taxes, property insurance, property operating expenses and is unaffected by inflated-related escalating expenses.

In its Japan portfolio, it owns 52 nursing home properties with a weighted average lease term to expiry of 11.79 years and a diversified tenant base across 28 nursing home operators. Based on its existing lease arrangements, about 95.2 per cent of its Japan portfolio is downside-protected.

First Reit has a portfolio of 31 properties comprising 16 in Indonesia, 3 in Singapore and 12 in Japan with a combined size exceeding S$1.2 billion. Its Reit manager is 60 per cent owned by OUE Limited and 40 per cent owned by OUE Lippo Healthcare (OUELH). As such, the Reit has rights-of-first refusal to a pipeline of properties from PT Lippo Karawaci Tbk and OUELH.

First Reit in its Q1 2022 business update reported 34.9 per cent year-on-year growth in net property and other income and 1.5 per cent growth in DPU paid (0.66 Singapore cents for Q1 2022). Following its maiden entry into Japan with the acquisition of 12 nursing homes, First Reit noted that it has successfully taken the first step of its First Reit 2.0 Growth Strategy to expand into developed markets and diversify geographical risk.

First Reit’s Indonesia hospital operator, PT Siloam International Hospitals Tbk reported stable quarter-on-quarter performance for Q1 2022 despite the impact of the Omicron variant. First Reit’s nursing homes in Japan and Singapore also noted high occupancy rates and the Reit remains confident of the resilient healthcare market in its operating markets.

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